After more than a year of review, California’s State Auditor released a report analyzing the California Department of Housing and Community Development’s (HCD) housing element review process. The main takeaway: HCD’s review process was consistent and timely, bolstering HLC’s belief that jurisdictions in San Mateo County can continue building on their housing progress more quickly and at lower cost in future housing element updates. 

The audit found that “HCD’s findings letters generally provided feedback that was precise, measurable, and based on [legal] criteria.” Though some jurisdictions in San Mateo County, as well as some state electeds, criticized HCD’s housing element review process, the audit did not support those critiques.

Jurisdictions in San Mateo County have made meaningful progress on housing, and the audit provides impetus to continue that work. Most cities in the County have completed their updates, but every jurisdiction except Redwood City required three or more rounds of review.

Local changes in expectations matter. The Auditor presents evidence that local jurisdictions struggled with the housing element process in large part because they were unprepared to comply with new legal requirements and larger housing production goals. Challenges finding consultants and community opposition to new housing further delayed the process. Poor communication between city staff, consultants, and elected officials about clear cut deadlines further delayed the process. Every planner knew housing elements were due January 31, 2023, but not every city council member was told that before the deadline!

California’s state auditor has a reputation for taking state agencies to task. The auditor excoriated the Governor’s Office of Emergency Services for failing to respond to fires in 2016, 2017, and 2018. In the last year, it has identified fraud, waste, and “critical weakness” in Cal OSHA and the California Health Department. In short, the auditor openly criticizes powerful state agencies and even gubernatorial offices. 

Yet the auditor’s findings largely uphold the legitimacy and legality of HCD’s housing element review process.

However, the auditor did suggest some improvements to the process that would help cities. Though HCD followed the law, it could have provided more personalized, consistent feedback if not for staffing constraints. By spreading out statewide housing element due dates across the entire eight-year cycle (currently, all housing elements are due in a four-year period), the legislature would free up HCD’s staff time to provide more assistance to local cities. 

Furthermore, HCD guidance regarding new statutory requirements often came out mere months before cities needed to implement them. Delaying implementation deadlines of new statutes would help HCD–and cities!–catch up. 

Yet despite these challenges–and because of the process–San Mateo jurisdictions made significant progress planning for more homes over the course of the 6th cycle housing element process. Cities across the county committed to change zoning rules to allow more types of housing, pass tenant protections to keep low-income residents housed, and invest in deeply affordable homes with public land and funding. These changes have already produced thousands of new homes and incentivized applications for thousands more in the pipeline. 

The auditor’s report suggests that local governments can continue improving their own planning processes to ensure they adequately meet state housing goals during the upcoming midcycle housing element review process and the 7th cycle housing element update slated to begin in 2031. While updating their housing elements in the future, cities can make three primary changes in early housing element drafts to increase likelihood of legal compliance: 

1. Acknowledge and analyze all constraints to housing in the constraints analysis. For example, last cycle, multiple cities completely ignored voter-initiated growth caps in their first draft housing element. In second drafts housing element, they might acknowledge growth caps but assert they have no impact on housing development feasibility. Only in third drafts did cities consistently commit to bring a ballot initiative before the voters to raise its housing cap on major housing element sites. Treating blatant barriers to housing development as non-entities delayed cities’ ability to implement necessary policy reforms.
2. When planning for housing on privately owned sites, exclusively include those that are likely to redevelop, and assume policy change will be necessary to incentivize development on sites that have remained unchanged for decades under existing rules. Multiple cities projected housing development on sites where the property owner had sent public comment letters saying explicitly that they had no plans to build housing there. One city project low- and very low-income housing would be built on the parking lot of every major commercial center, assuming 100% replacement parking and no impact on the existing commercial uses–including those of major tech offices. Projecting future housing development in unlikely locations without any associated policy reforms prevented cities from planning for homes in realistic locations. 
3. Included vague or unclear language in the policy and programs section that did not address identified constraints or facilitate development on important sites. Over and over again, cities committed to “consider,” “evaluate,” “study,” or otherwise look at–but not actually implement–various pro-housing policies. Oftentimes, the policies and program section did not respond to constraints that cities identified in their own analyses. Without making firm commitments to address housing constraints so as to make housing development feasible on identified sites, cities failed to fulfill the fundamental intent of the housing element process: Meeting local housing needs with tangible policy change. 

The housing element process challenges cities to rise to the moment, responding to the vast shortage driving housing prices higher and higher and displacing thousands of low-income residents by making concrete plans to legalize more homes, implement tenant protections, and more. Cities will have another chance to prove their earnestness in the 2027 midcycle review, when HCD will evaluate the progress each city has made toward its housing goals–and potentially request more policy reforms for those jurisdictions that have fallen behind. And as cities continue making progress toward their goals, they can start preparing early for the 7th housing element cycle a short five years away.